Farm Ireland

Sunday 22 April 2018

Glanbia offer to be lodged today

Intensive three-week communication blitz planned by co-op

Declan O'Brien

Declan O'Brien

Glanbia Co-op is set to make an official offer today for Glanbia plc's Irish operations.

Dates for farmer information meetings and arrangements for shareholders to vote on the bid will also be confirmed by the co-op.

No details of the bid were available ahead of this morning's announcement but industry analysts have suggested that the co-op is prepared to pay in excess of €320m for the plc's Irish businesses.

However, it is unclear if this figure includes a share of the company's €70m pension deficit. The co-op is seeking to buy Glanbia's dairy processing, consumer foods and agri-trading divisions. The business has a turnover of €1bn.

Any deal must receive the backing of 75pc of the co-op's shareholders at two special general meetings.

Those eligible to vote include 4,174 active milk suppliers, 2,742 who trade in grain or goods with the co-op and a further 1,311 former milk suppliers, grain growers and traders.

The two special meetings are due to take place between the middle and end of next month at the Teagasc College, Kildalton, Co Kilkenny.

The second meeting will only happen if the proposed deal receives the required 75pc support at the first meeting. An intensive three-week communication campaign, involving private meetings for co-op shareholders, will take place in the run-up to the first special general meeting.

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Glanbia co-op has a 54pc shareholding in the plc and it has proposed to sell a proportion of this stake to fund the purchase of the Irish business.

It is predicted the co-op's shareholding in the plc will fall to around 20pc as part of the buyout plan, and it is understood that a substantial spin-out of plc shares to co-op members will form part of the overall package.

Supporters of the buy- back plan say it will give farmers greater input into the running of the business, enabling the dairy processor to be run for the primary benefit of farmer members.

But opponents point to the poor performance of other Irish co-ops and argue the business lacks sufficient scale to be a dynamic player in the food sector.

The loss of the plc leadership, particularly chief executive John Maloney, is also cited by detractors as a serious concern.

In other dairy news, Arrabawn's buyout of the Dawn liquid milk operation in Galway, from Kerry Group, has moved a step closer.

Arrabawn's board is understood to have given the green light to the proposal last Friday, and management from Nenagh will meet workers at the Dawn plant in Renmore today as part of a 30-day consultation period before the deal is finalised. Officials at both Arrabawn and Kerry refused to comment on developments.

Meanwhile, both Dairygold and Arrabawn have increased milk prices for last month.

The Dairygold board agreed to lift last month's milk price by 1.25c/l, including VAT, to 27c/l. Arrabawn is on 27.48c/l including VAT for March.

Irish Independent